Proposed franchise legislation featured prominently in “An Agenda for Justice,” a report recently released by the British Columbia Branch of the Canadian Bar Association (CBA). The document, released on February 5, 2013 in advance of the upcoming provincial election, presents a series of judicial and legislative reforms and recommendations aimed at improving access to justice for all British Columbians. It includes the following recommendation to enact franchise legislation:
Enact a Franchise Act
. In 2012, the British Columbia Law Institute began a project on a Franchise Act
for British Columbia. Franchisees are usually run by small business owners operating businesses under licenses by franchisors. Franchisees are found in many industries: food, retail and services. Small business owners in British Columbia make up 98 percent of all businesses in British Columbia and many of these businesses are franchisees. These small businesses often lack the resources to fight unscrupulous franchisors. Where there are disputes, British Columbia franchisees often have to litigate in Ontario or even in the United States since it is common for franchise agreements to require disputes to be resolved by the governing law of the franchisor, which is usually a foreign jurisdiction. Litigating outside of British Columbia is often prohibitively expensive for British Columbia franchisees. A Franchise Act
for British Columbia would fairly balance the interests of both parties and it would provide protection to small business franchisees.
An Agenda for Justice follows a similar report that the British Columbia Law Institute (BCLI), a law reform research organization, released in the fall of 2012. The BCLI announced the commencement of a project to examine whether franchise legislation is needed in British Columbia and, if so, what provisions such legislation should have in order to provide legal protection for franchisees operating in the province.
The recent activity of the CBA’s British Columbia Branch and the BCLI seems to be sending a clear message that the time may have come for enactment of franchise legislation in the third most populous province in Canada. Currently five Canadian provinces have franchise legislation in force: Alberta, Ontario, New Brunswick, Prince Edward Island and, most recently, Manitoba.
If British Columbia enacts franchise legislation, it is hoped that it will be modelled on, or closely follow, the Uniform Law Conference of Canada’s Uniform Franchises Act to ensure consistency and facilitate the standardization of a franchisor’s procedures across Canada. While the franchise legislation in Manitoba, Prince Edward Island and New Brunswick is largely consistent with the model Uniform Franchises Act, none of the provinces adopted the Act wholesale; each province has made some changes.
BCLI is expected to publish a consultation paper in the near future, with tentative recommendations that will be used to consult broadly with the public. BCLI will then produce a report with final recommendations and draft legislation. Interested stakeholders, including franchisors, are encouraged to participate in this broad consultation.
If you have any questions on the recommendation of the CBA’s British Columbia Branch to enact franchise legislation in B.C. and/or BCLI’s franchise project, please contact a member of Osler’s Franchise Team.